1042-S form (income code 16) - Unable to e-file

[Carolina_V]

Hello,

I am a resident alien and received a 1042-S (income code 16).

I reported it as a fellowship, and reported the income tax withheld as "Other income taxes paid in 2020". However, I am not able to e-file (I am receiving a message saying that my income tax withholding is greater than my income.

Is this correct? Is there a way to report the fellowship under income so I can e-file?

Thank you!

[LinaJ2020]

You should be able to e-file.  

You will treat Form 1042- S as receiving a scholarship or fellowship to offset your qualified education expenses if there are any.  You will enter the amount in box 5 on your Form 1098-T.  If you have paid any qualified tuition expenses out of pocket, you would enter information by following the steps below.  As IRS receives a copy of your Form 1042-S, you can e-file your tax return.  You do not need to submit your Form 1042-S separately.

In TurboTax Online,

• After sign into your account and select Pick up where you left off
• At the right upper corner, in the search box, type in 1098t and Enter 
• Select Jump to form 1098T 
• Follow prompts

If you have paid in any tax withholdings, enter info so you will not be taxed twice.  Here are the steps:

• At the right upper corner, in the search box, type in estimates paid and Enter
• Select Jump to estimates paid
• On the screen, "Estimates and Other Income Taxes Paid", select Other Income Taxes Paid / Withholding not already entered on a W-2 or 1099, to enter info

If your scholarship amount exceeds your tuition and other qualified expenses like books and supplies, the difference will be taxable as wages (SCH) on line 1 of your Form 1040.

[Carolina_V]

Dear Lina,

Thanks a lot for your help!

Two follow up questions:

1. The Fellowship reported on my 1042-S is not on my 1098-T. Is it correct to add it to "Other Scholarships/Grants/Fellowships?"
2. When I tried to e-file, I received the message below (probably because the only income I received in 2020 was from the fellowship, which I was taxed for). Any recommendation on how I should proceed?

"Your Federal Return is not eligible for electronic filing. The tax withheld of $x is greater than or equal to $0, the sum of income from the following sources:
Form 1040, line 1

Form 1040, line 2b

Form 1040, line 3b

Form 1040, line 4b

Form 1040, line 5b

Schedule 1, line 7

Form 1040, line 6a

Schedule 1, line 8

Schedule C, line 1"

Thank you!

[ReneeM7122]

Yes, Is it correct to add your fellowship to "Other Scholarships/Grants/Fellowships."

Here is a link to a thread with more information about how to report fellowship income in Turbotax.

[Carolina_V]

Thank you! I followed the instructions, but I am receiving the message below when I try to e-file. Any idea why?

"Your Federal Return is not eligible for electronic filing. The tax withheld of $x is greater than or equal to $0, the sum of income from the following sources:
Form 1040, line 1

Form 1040, line 2b

Form 1040, line 3b

Form 1040, line 4b

Form 1040, line 5b

Schedule 1, line 7

Form 1040, line 6a

Schedule 1, line 8

Schedule C, line 1"

Thank you!

[ReneeM7122]

Code 16 would signify scholarship income. 

If the 1042-S is reporting the scholarship, and it is taxable, you can enter it in the Education Section under Deductions & Credits, but don't report a 1098-T if you didn't get one. Answer "No" that you didn't receive a 1098-T and "No" you don't have an exception, the screens that follow should allow you to enter the scholarship amount only. (without the 1098-T) 

Yes, enter the tax withheld under "Estimates and Other Taxes Paid" 

Your return should be eligible for e-filing. Since the amount from the 1042-S will be on line 1 of your 1040, there is no reason to mail that form in, but do keep a copy with your tax files. 

Answer from this thread

[Carolina_V]

Hi Renee,

Thank you for the help and patience.

I did follow the instructions (reported my fellowship on "Education Section under Deductions & Credits" and the tax withheld under "Estimates and Other Taxes Paid"). Yet, my fellowship did not appear on line 1 of my 1040. I suspect it is because my education expenses were higher than my fellowship.

This is preventing me from being able to e-file. Is there any workaround?

Thank you,

Carolina

[AmyC · Accepted solution]

You can have it turn into income. You can enter it as other income. Follow these steps:

1. Log into your return
2. Federal
3. Click on Income
4. Scroll to the bottom section, Less Common Income
5. Select Miscellaneous income, 1099-A, 1099-C, start
6. Select Other Income
7. Did you receive other wages? Yes
8. Continue
9. Household employee? Continue
10. Sick or disability pay? Continue
11. Any other earned income or wages? Yes
12. Enter source of Other Earned Income
13. Select Other
14. Continue
15. Enter description SCH
16. Enter amount, $1 or full amount

If the amount is less than $12,400, you could enter the whole thing since it would not be taxed.

[Rubi11]

Hello,

I have done my tax return and printed out to mail it (because my spouse doesn't have a SSN or ITIN). Once I'm ready to mail it I just received 1042s with income code 16. What should I do now?

[LeonardS]

When you receive a Form 1042- S with the code 16, you will treat it as receiving a scholarship or fellowship to offset your qualified education expenses if there are any. 

If you have paid any qualified tuition expenses out of pocket or with a scholarship, you would enter information by following the steps below.

1. Open or continue your return
2. Select Search and search for 1098-t, then select the Jump to link in the search results
   • Another way to find this section is to select Federal from the left menu, then Deductions & Credits. Locate the Education section and select Show more, then Start or Revisit next to Expenses and Scholarships (Form 1098-T)
3. On the Do you want to enter your higher education expenses? screen, answer Yes
4. Answer Yes to Did you get a 1098-T for the year? and Continue
5. On the next screen, you can choose how you'd like to add your 1098-T. You can upload a digital copy from your computer or type it in yourself. Select which option you'd like and Continue
6. If you need to enter a 1098-T for someone else, continue through the screens until you get to the Your Education Expenses Summary screen, then select Add A Student

This link Where do I enter Form 1098-T (Tuition Statement)? has information you may find useful.

@Rubi11

[Rubi11]

I'm sorry. I forget to mention, I received 1098t and already entered it. Should I add up the amount in the 1042s with the amount in the 1098t? The problem is I have already printed out my tax return to mail it

[RobertB4444]

@Rubi11  You should subtract the amount on your 1042-S from the education expenses on your 1098-T.  You need to adjust the credit you took on your return so that it reflects the amount you received on your 1042-S.

Also, if your spouse doesn't have an ITIN you can't file a joint tax return.  They need to fill out a W-7 and apply.

Here is the IRS' take on non-resident spouses.